How to Buy Art at an Auction
Adrian Hill FRSA shares his approach and top tips for clients interested in securing their first work of art from auction.
There are very few things as rewarding as finding a piece of art that inspires you enough to want to own it and place it in your home. Indeed the moment a new work arrives and is hung or placed there is an overwhelming sense of belonging.
Whereas in an art gallery artwork is priced, at an auction works being sold can deliver some exceptional circumstances. Hearts racing, prices rising, auctioneers whipping the room into a frenzy and the immeasurable satisfaction of having the winning bid can lead to quite the euphoric experience … as long as you’ve not just paid more than double what it was worth and five times more than you intended to!
It is vitally important to ensure that prior to making this important decision, about your potential new purchase, that you have all the tools in place to secure the perfect piece at a price you are happy to pay for it.
I use multiple auction houses from around the globe to source and secure works for clients, my galleries and my own private collection. Most operate in identical ways, with similar fees, taxes and royalties charged over and above the ‘hammer price’. However, I always use the same principles each time when making my approach to bid on any work at any auction.
Research Your Artwork
This for me is often the most important step, certainly if I am securing an investment piece for a client or for myself. The art industry is known for its famous forgers and fakes, indeed the television program “Fake or Fortune” has enlightened the public to the many pitfalls in securing a piece that isn’t quite what it seems. But if you are securing a work for you and your home it is important to understand exactly what you are buying.
Is the work original, a one-off, unique? Is the work a print or a multiple i.e. are there many editions on the market, some could be signed by the artist or numbered in a limited edition. Is the work a copy or in the style of a famous artist … and has the ‘Lot’ (the number of each individual item in the auction) been listed correctly.
Most of this information will either be provided in a catalogue from the auction house or available to view online on their website. This means that you can be quite confident the Lot you are interested in is exactly what you are looking to buy.
If you are looking at a more significant piece, or a work for investment, the auction house should also be able to provide you with a provenance detailing where the work has come from, potentially who has owned it, if it has been auctioned before and the value the piece made.
This is generally where most of my potential purchases tend to hit a stumbling point. There is still nothing better than viewing the work in person and wherever possible this is always my preferred option. However, each Lot will have with it a condition report and if not immediately available can be requested directly from the auction house, usually by email. Additional photographs can be requested to ensure that, if you are unable to view the work in person, you get a jolly good feel for the condition of the piece.
Things to look out for are signs of surface damage, including ageing, staining, foxing (orange/red spots on the paper surface), any repairs, light deterioration; where a work has faded in sunlight over time or water damage. The more pristine a piece the more likely it is to fetch a good price therefore this part of the process is imperative. Although the art restoration trade is quite remarkable, good restoration also comes with a good price, so the condition of works greatly affects their potential to score big on the hammer.
Once you have established that the work of art is what you are looking for, is in a condition that you are happy with, you will need to register with the auction house so you are able to bid on your chosen Lot.
This is usually quite a straightforward process. You will need proof of identity, a passport or driver’s license, register a credit or debit card to your new account and ensure the auction house has all of your relevant contact details.
Once you have provided the necessary information you will be allocated a unique buyers number which will be your reference when either using your paddle within the auction (the board you use to bid with), via the telephone or online bidding. You also have the opportunity to leave a maximum bid (book bid) with an auction should the work not be applicable for a telephone line or you are unable to attend or bid online… my advice would be, wherever possible, to bid live.
"There are very few things as rewarding as finding a piece of art that inspires you enough to want to own it and place it in your home"
This is a particularly easy thing to suggest, yet time and time again an auction brings the … ‘I must have this’ … beast out in the best of us, and a term called ‘auction fever’ takes over any rationale, with Lots selling for many, many, times their estimate and indeed market values.
It is not as simple as looking at the ‘hammer price’ which is the point where a bidder has out-bid their competition and has the gavel knocked, by the auctioneer, at the rostrum to the tune of “sold”… sometimes to rapturous applause! It is the slightly more complicated breakdown of additional fees which make up the value you will eventually end up paying.
To better understand the breakdown of the fees once the ‘hammer price’ has been established there will be the auction house ‘buyer’s premium’ added to the transaction. This will usually be a figure of 20% - 35% depending on the auction house and will sometimes also be reflective of the overall amount of the ‘hammer price’, reducing incrementally at certain monetary thresholds. This figure is also subject to VAT so be mindful to check if your ‘buyer’s premium’ is an inclusive or exclusive fee.
Artworks over the value of £1,000.00 are subject to an Artist Resale Right (ARR) called Droit de suite which is a right granted to artists or their heirs to receive a fee on the resale value of their work of art.
This is typically set at 4% of the total sale price (including buyer’s premium) but again can reduce to 0.25% if the sales figures reach certain levels, usually in the hundreds of thousands of pounds or above.
However, these additional fees are imperative to take into consideration when approaching a purchase, setting a limit and not getting caught out.
If a painting sells on the hammer for £5,000.00 and the buyer’s premium is 30% + VAT, adding in the Artist Resale Right at 4% means the price actually paid for the piece is £7,072.00. Don’t also forget if you are bidding online there can be additional fees for using third-party platforms like The Saleroom meaning the price can rise further still.
It is for the above reasons why careful consideration to what your maximum ‘hammer price’ limit is going to be and sticking to it, will mean you get the piece for what you are really prepared to pay for it.
Aside from the fees involved in making a purchase you will also need to pay close attention to recent sales of works by your chosen artist. Comparing similar works will give you a good indication of your ‘hammer price’ and how far you are prepared to go to secure the work.
When bidding at an auction I tend to use my own guide, listing the low estimate auction price, rising in instalments to the price that I am prepared to pay including details of all the additional fees. This way I know exactly what to bid and what I will ultimately have to pay should I win the auction.
This matrix stops at my limit, which usually means I will stop bidding. I cannot honestly say that has worked every time as a little bit of ‘auction fever’ can sometimes get the better of me!
Hopefully, once you are the winning bidder and you didn’t go over your maximum bid, you will be able to collect your new acquisition in person or have it shipped to your home. Most auction houses will have a recommended courier at competitive rates but remember…this is also an additional cost. If you are buying from overseas most works will be subject to import duty meaning there could be more taxes to pay … but as long as you plan properly and work out your costs stage by stage then your new acquisition will become a lovely new addition to your home.
Adrian Hill FRSA is the Managing Director of Adrian Hill Fine Art and The Gallery in Lees Yard, Holt, Norfolk and Adrian Hill Fine Art, The George Hotel, Stamford, Lincolnshire